Eik fasteignafélag hf (ICE:EIK) Will Pay A Larger Dividend Than Last Year At ISK0.59

Eik fasteignafélag hf.'s (ICE:EIK) periodic dividend will be increasing on the 12th of April to ISK0.59, with investors receiving 16% more than last year's ISK0.51. This takes the annual payment to 5.0% of the current stock price, which is about average for the industry.

Check out our latest analysis for Eik fasteignafélag hf

Eik fasteignafélag hf's Earnings Easily Cover The Distributions

We aren't too impressed by dividend yields unless they can be sustained over time. However, Eik fasteignafélag hf's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share could rise by 16.9% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 23% by next year, which we think can be pretty sustainable going forward.

Eik fasteignafélag hf's Dividend Has Lacked Consistency

Eik fasteignafélag hf has been paying dividends for a while, but the track record isn't stellar. This suggests that the dividend might not be the most reliable. Since 2015, the dividend has gone from ISK0.17 total annually to ISK0.51. This means that it has been growing its distributions at 15% per annum over that time. Eik fasteignafélag hf has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Eik fasteignafélag hf has seen EPS rising for the last five years, at 17% per annum. Eik fasteignafélag hf definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Eik fasteignafélag hf's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've identified 3 warning signs for Eik fasteignafélag hf (1 is potentially serious!) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.